Wacker Neuson SE generated positive earnings in the second quarter of fiscal 2009, with cost-cutting measures having the desired effect. In the second quarter, revenue increased compared with the previous three months, but was lower than the second quarter of 2008.
“We have seen a quarter-on-quarter rise in revenue for the first time in a year,” said Dr. Georg Sick, CEO. “The measures we announced in the Q1 report aimed at cutting costs and streamlining the organizational structure started to take effect, enabling us to generate a positive result.”
Revenue for the second quarter totaled €156.5 million (about U.S. $223.4 million) compared with €137.5 million for the first quarter. Profit for the period was €1.4 million (about U.S. $2 million), compared with €16.6 million for the first quarter.
The increase was not significant enough to prevent the group from reporting a loss for the first half year, with order intake significantly lower than figures from the same period last year, especially in the core markets of the United States and Europe. The Group’s cost-saving measures resulted in a sharp decrease in selling expenses and research and development and administration costs, with particular focus placed on cutting back investments and limiting the scope of projects, as well as reductions in personnel costs.
“We practically achieved our target of reducing work capacity by 20 percent by mid-2009, compared with figures at the close of 2008,” said Sick. “We will continue to focus our efforts here on expanding flextime frameworks and short-time work. However in countries where these measures are not possible, we have had to lay off more than 700 members of staff since the end of September 2008. This figure includes temporary workers.” The cost of the restructuring measures was €5.7 million.
Wacker Neuson cut its working capital by €32.4 million by downsizing its inventory. Equity ratio rose to 78.9 percent, and net financial debt dropped by more than €20 million.
Wacker Neuson predicted that unfavorable market trends will continue for the short and medium term, and does not expect positive effects from government economic recovery packages before the end of 2009. However, it anticipates that the backlog of infrastructure projects worldwide is increasing. Still Wacker Neuson remains cautious about the rest of the year and Sick added that the company could not rule out the possibility of an annual loss.
Wacker Neuson is based in Munich, with U.S. headquarters in Menomonee Falls, Wis.
